(October 2020)
BlackRock is the largest asset manager in the world, commanding over $7 tn of assets. So when it gives its opinion on an asset class, it is usually worth listening to. Well, the asset manager’s CEO has just issued his view on a key area—emerging markets. Larry Fink, CEO, says that he is bearish on emerging markets for multiple reasons. Firstly, COVID-19 has greatly raised the risk premia for holding EM securities, and he says many EM leaders don’t understand what it will take to restructure their debts, which seems like a necessity for some. Additionally, Fink says that the move towards stronger environmental standards means money will leave emerging markets. “When we talk about climate change, and we think that’s a big issue and a reallocation of capital … part of that reallocation of capital is movement out of the emerging world”.
(New York)
FINSUM + Magnifi: We cannot really argue with BlackRock’s position here. The one point we would add is that the US Dollar is likely to be on a bearish trend for a while, which is bullish for EMs. Therefore, they might have some wind at their backs.
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